Many products and services are subject to significant price volatility based on the laws of supply and demand. This is particularly true of perishable products and services (hereinafter collectively “products”) that have a significant capacity value that becomes worthless once the capacity, or event, has expired. For example, an empty airline seat has no value once the plane has departed, and a concert event seat is worthless once the concert is over. These all represent limited perishable products (the number of seats) with a common expiration date (the event or flight date). So it goes for other products such as theatre tickets, sporting events, hotel nights, and cruise staterooms. Consumers have limited options today when faced with the decision to purchase these products, and sellers often are not able to optimize or properly manage their revenues when selling such products.
Using the airline example, consumers typically must choose between expensive refundable fares including first class, business class, and full coach fares; or deeply discounted, non-refundable fares. Often, consumers feel pressured to purchase tickets well in advance of their flight in order to obtain pricing that fits within their budget, even though they may have considerable uncertainty regarding their plans. With deeply discounted fares, most airlines charge a significant transfer or change fee to make schedule changes, and often offer limited or no refund options on such fares. This situation presents problems for both consumers and airlines, and often results in consumers deciding not to purchase tickets at all and/or suffering the risk and uncertainty of fare increases or fare volatility as the time for the flight approaches. Airlines, similarly, do not sell as many tickets as reluctant consumers choose not purchase tickets under such terms, and airlines lose the opportunity to fully optimize and manage revenue yields.
Furthermore, there presently exists no meaningful market for airlines to facilitate the transfer of (or to create a market for) previously sold seats from existing ticket purchasers that do not place as high a value on tickets as later potential purchasers do based on changing or increased later demands. This situation results in a loss of significant potential revenue and reduced revenue yields that otherwise could increase an airline's profitability. Ticket agents and/or ticket brokers and market makers also suffer from these same problems and disadvantages.
Similar problems and disadvantages exist in connection with the auctioning of the same or similar items, products or services. For example, the sales of products on the Internet through an Internet auction site often present consumers with the difficult choice of immediately buying an item outright, which may result in paying too high a price, or waiting for the auction to take place resulting in not winning the auction and having to wait to get the product, possibly losing the opportunity to purchase the product altogether, or possibly paying a much higher price. Auction sellers that sell the same or similar items have the problematic choice of running numerous simultaneous auctions expiring at or near the same time resulting in a possible oversupply and lower bid amounts, or running fewer auctions and running the risk of losing sales to others and resulting in increased overall inventory costs.